SYDNEY--Australia's Labor government is pressing ahead with plans to create the country's first domestic gas reserve in the hope it will ease the soaring cost of energy for business and households.

Federal Energy Minister Chris Bowen announced Thursday a legislative package that will allow the capture of 20% of gas exports for local users.

Bowen said that the target will ensure that the domestic gas market is always modestly oversupplied.

"For too long Australia has been in the perverse situation where despite being one of the world's largest gas producers we had shortages and prices shocks at home," Bowen said.

"We're fixing that--with a system that secures the gas we need and pushes prices down for households and businesses," he added.

Exporters could provide up to 200 additional petajoules of gas a year to the domestic market, ensuring more than enough supply to meet manufacturing demands," Bowen said in a statement.

The scheme ensures domestic customers can buy from a larger pool of gas, reducing the risk of tight market conditions driving price spikes, while also promoting long-term contracts and shielding industry from global price volatility, Bowen said.

The domestic supply obligation will commence from January 2028.